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European hotel transactions reach record levels as investors step up interest

European hotel transactions reach record levels as investors step up interest

European hotel transaction volume reached €21.7 billion in 2017, up 22% on 2016 and the second largest figure ever recorded, according to our annual European Hotel Transactions report published this week.

Single-asset transactions in
Europe were up 16% year-on-year to a volume of €12.4 billion, continuing an
upward trend and accounting for 57% of transaction volume, with some 323 hotels
– 59,500 rooms – sold in 2017 for more than €7.5 million.

Portfolio volume showed a
29% increase in activity to €9.3 billion with Spain accounting for the majority
of interest – 36% – with nearly 30,0000 rooms sold in the country in 2017
across 14 portfolios, reflecting growing investor interest for Southern Europe.

‘A year of strong RevPAR
growth across most of Europe was reflected in transaction levels, particularly
in London, Amsterdam, Barcelona and Madrid,’ commented report co-author Peter
Szabo, associate at HVS Hodges Ward Elliott.

‘Other secondary markets
such as capital cities in the CEE and Southern European resorts also enjoyed
increased investor interest as hotel performance saw big improvements.’

The UK regained its leading
role in transaction activity with sales volumes accounting for 25% of total
activity reaching a value of €5.4 billion, up from €3.6 billion in 2016.
Single-asset sales saw values of €3 billion, while portfolio activity accounted
for €2.4 billion, despite ongoing political uncertainties.

The year saw Spain
experience a record year for hotel transactions, accounting for 23% of total
activity and doubling 2016 results with sales valuing €5 billion.

Transactions in Germany saw
a slowdown in 2017 after a record year in 2016, with portfolio sales down 38%
to a value of €1.5 billion. However, single-asset sales saw an increase, with
Munich and Berlin proving particularly popular with investors.

London was once again the
leading European hotel transaction market, with a total volume of some €2.5
billion, ahead of Amsterdam at €1.3 billion. The year saw Paris fall to third
place in the table, with €777 million-worth of transactions. Madrid and
Barcelona recorded a combined transaction volume of €1.1 billion.

‘Stability in both exchange
rates and interest rates and the availability of hotel stock has helped Europe
become popular amongst hotel investors, particularly private equity investors
from North America,’ commented report co-author Magalí Castells, associate,
HVS.

‘As we move into 2018, key
factors that will influence the transaction market will be interest rates and
staffing pressures. As stock becomes scarce in primary markets developers and
investors will be increasingly looking at secondary markets such as Southern
Europe or the CEE.’